Chapter 3
ANALYZING THE MARKETING ENVIRONMENT
MARKETING STARTER: CHAPTER 3
Philips: Analyzing the Marketing Environment in the Middle East
Synopsis
At the beginning of the 21st century, Philips needed a new and coherent marketing strategy for the entire Middle
East region, which had been identified as a key market by the company. In order to better address macroeconomic
factors and regional preferences, Philips wanted to develop a more integrated and less fragmented marketing
strategy for the region. The first objective was to select the most attractive markets in the region. Philips developed a
statistical model that displays the correlation between a country’s demand for lighting and its GDP per capita. In
order to find the most attractive markets, Philips Lighting used its model and combined it with market data from the
Middle East, which included population, GNP growth, and GNP per capita. Today, the lighting market is impacted
by multiple factors, three of which are particularly important. The first is the macroeconomic situation,
country-specific energy efficiency regulations, and an increase in energy awareness, which are redefining future
lighting product portfolios. Government action limiting certain energy sources, especially nuclear power due to
events over the last few years, has resulted in additional demands for energy-efficient products such as LEDs.
Dubai’s government has started an initiative in 2014 to switch lighting in government buildings to LED, which is
more energy efficient and can be digitally controlled. Projects like this have helped Philips to grow in the region.
Phillips has managed to leverage these factors, which heavily influence and shape the marketing environment, for
positive change. The company’s ability to understand current and probable future shifts in the lighting market has
driven its continuous growth in this region, making it the market leader in Middle Eastern countries such as the
Emirates, where it has a 38.5 percent market share.
Discussion Objective
A brief discussion of the Philips story will help to illustrate how leading companies must react to the environment.
While the need for lighting has changed along with economic development, Philips has not lagged in adapting to the
changes. Here, the discussion goal is to link Philips’s threats, opportunities, and performance to the changes
occurring in the firm’s microenvironment and macroenvironment. This discussion provides a useful transition from
the marketing management model provided in Chapter 2 to the concepts of analyzing the marketing environment
presented in Chapter 3.
Starting the Discussion
To kick off the Philips discussion, pull up the Philips website at www.philips.com/global/. Ask students to analyze
the regions where Philips has a presence. Ask students why they think Philips has made special efforts to enter
certain markets. Be sure the students notice the new products that are also promoted in these regions. What do they
think of its offerings in these regions? The key question is this: how has Philips handled changes in the marketing
environment? Use the following questions to focus the discussion.
Discussion Questions
1. What appear to be Philips’ unique strengths in analyzing the marketing environment? Which key principles
from this chapter were available to company planners in anticipating, capitalizing on, and even helping
shape the new marketing environment? (Here, you will want to focus the discussion on publics along with
the demographic, economic, and cultural environments. Nations have undergone changes over the decades;
how have these impacted on Philips’ approach to marketing?)
2. How have changes in the marketing environment created opportunities and threats for Philips? (Focus on
changes in lifestyle, customer needs, and business processes. Philips’ approach to marketing has impacted
its performance. While it has experienced incredible success over the decades, which forces might threaten
that success?)
3. How does the chapter-opening story relate to what comes later in the chapter? (This question transitions the
discussion to Chapter 3 topics such as the impact of the actors and forces in the microenvironments and
macroenvironments and how companies must respond. The key point: the best companies do not merely
respond to changes. They help to shape and drive those changes. And companies that don’t respond tend to
struggle.)
CHAPTER OVERVIEW
Use Power Point Slide 3-1 Here
This chapter shows that marketing does not operate in a vacuum but rather in a complex and
changing environment. Other actors in this environment—suppliers, intermediaries, customers,
competitors, publics, and others—may work with or against the company. Major environmental
forces—demographic, economic, natural, technological, political, and cultural—shape marketing
opportunities, pose threats, and affect the company’s ability to build customer relationships. To
develop effective marketing strategies, you must first understand the environment in which
marketing operates.
CHAPTER OBJECTIVES
Use Power Point Slide 3-2 here
1. Describe the environmental forces that affect the company’s ability to serve its customers.
2. Explain how changes in the demographic and economic environments affect marketing
decisions.
3. Identify the major trends in the firm’s natural and technological environments.
4. Explain the key changes in the political and cultural environments.
5. Discuss how companies can react to the marketing environment.
CHAPTER OUTLINE
p. 91 INTRODUCTION
Philips, the worldwide electronics giant, has been around
for 124 years, and it is still the market leader in lighting
solutions. It has also been a leader in launching many
meaningful innovations across different electronics lines.
In the 21st century, Philips needed a new and coherent
marketing strategy for the entire Middle East region.
Philips needed a more integrated marketing strategy, and it
identified the most attractive markets by developing a new
statistical model and analyzing current and probable future
shifts.
P. 91
Photo: Philips
Opening Vignette Questions
1. How is Philips addressing the changing
marketing environment?
2. Analyze the company’s attitude toward
marketplace change. How has this attitude
impacted its success?
3. Do you believe that Philips can maintain its
position in the Middle Eastern markets? Why or
why not?
4. In such a rapidly changing marketing
environment, what might Philips be doing in five
years? Ten years?
p. 92
PPT 3-3
PPT 3-4
p. 92
PPT 3-5
PPT 3-6
More than any other group in a company, marketers must be
the trend trackers and opportunity seekers.
Describe the environmental forces that affect the
company’s ability to serve its customers.
THE MICROENVIRONMENT AND
MACROENVIRONMENT
A company’s marketing environment consists of the
actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful
relationships with target customers.
The microenvironment consists of the actors close to the
company that affect its ability to service its customers.
The macroenvironment consists of larger societal forces
that affect the microenvironment.
Learning Objective
1
p. 92
Key Terms:
Marketing
environment,
Microenvironment,
Macroenvironment
Assignments, Resources
Use Additional Project 1 here
Use Video Case here
Troubleshooting Tip
This is an intense chapter that presents a lot of
information that might make some students’ heads
swim. If it hasn’t happened before, this is where
students really begin to get the picture that
marketing managers need to be highly analytical. It
helps to present the in-depth discussion of current
macro trends as something that needs to be
understood, not memorized.
p. 92
PPT 3-7 THE MICROENVIRONMENT
Marketing management’s job is to build relationships with p. 93
PPT 3-8
p. 93
PPT 3-9
PPT 3-10
p. 94
PPT 3-11
p. 94
PPT 3-12
customers by creating customer value and satisfaction.
The Company
All the interrelated groups form the internal environment.
All groups must work in harmony to provide superior
customer value and relationships.
Suppliers
Suppliers provide the resources needed by the company to
produce its goods and services. The company must treat
suppliers as partners to provide customer value.
Marketing Intermediaries
Marketing intermediaries help the company to promote,
sell, and distribute its products to final buyers.
Resellers are distribution channel firms that help the
company find customers or make sales to them.
These include wholesalers and retailers.
Physical distribution firms help the company to
stock and move goods from their points of origin to
their destinations.
Marketing services agencies are the marketing
research firms, advertising agencies, media firms,
and marketing consulting firms that help the
company target and promote its products to the right
markets.
Financial intermediaries include banks, credit
companies, insurance companies, and other
businesses that help finance transactions or insure
against the risks associated with the buying and
selling of goods.
Today’s marketers recognize the importance of working
with their intermediaries as partners rather than simply as
channels through which they sell their products.
Competitors
Marketers must gain strategic advantage by positioning
Figure 3.1: Actors
in the
Microenvironment
p. 93
Photo: Honda
p. 94
Key Term:
Marketing
intermediaries
p. 94
Photo: Coca-Cola
p. 95
PPT 3-13
p. 96
PPT 3-14
their offerings strongly against competitors’ offerings in the
minds of consumers.
No single competitive marketing strategy is best for all
companies.
Publics
A public is any group that has an actual or potential interest
in or impact on an organization’s ability to achieve its
objectives.
Financial publics influence the company’s
ability to obtain funds.
Media publics carry news, features, and editorial
opinion.
Government publics. Management must take
government developments into account.
Citizen-action publics. Consumer organizations,
environmental groups, and others may question a
company’s marketing decisions.
Local publics include neighborhood residents
and community organizations.
General public. The general public’s image of
the company affects its buying.
Internal publics include workers, managers,
volunteers, and the board of directors.
Customers
There are five types of customer markets. The company
may target any or all of these.
1. Consumer markets are individuals and households
that buy goods and services for personal
consumption.
2. Business markets buy goods and services for further
processing or for use in their production process.
3. Reseller markets buy goods and services to resell at
a profit.
4. Government markets are composed of government
agencies that buy goods and services to produce
public services.
5. International markets are buyers in other countries,
including consumers, producers, resellers, and
governments.
p. 95
Key Term: Public
p. 95
Ad: The Home
Depot Foundation
Review Learning Objective 1: Describe the environmental
forces that affect the company’s ability to serve its
customers.
Assignments, Resources
Use Discussion Questions 3-1 and 3-2 here
Use Additional Project 2 and 3 here
Use Outside Example 1 here